State Street Shares Rattled by Credit Worries

State Street shares fell sharply Tuesday on worries about the company's more than $20 billion in commitments to asset-backed commercial paper programs.

State Street recently said in U.S. regulatory filings that it administers four, third-party owned asset-backed commercial paper programs, or conduits. Banks rely heavily on these conduits for cheap, short-term funding, but if they cannot continue to access this debt they could face a credit squeeze.

U.S. Subprime Crisis Weighs on State Street

Concerns over exposure to the U.S. subprime crisis are weighing on State Street bank and Barclays ahead of the U.S. open on Tuesday. CNBC's Michelle Caruso-Cabrera talks to Rob Morgan, Investment Strategist at Janney Montgomery Scott, for more.

At the end of June, State Street disclosed nearly $29 billion in off-balance-sheet conduit assets. The Boston-based bank does not hold any equity interest in the conduits.

However, State Street is exposed to the conduits because it provides back-up lines of credit to them. Its commitment under liquidity asset purchase agreements and back-up lines of credit totaled about $28 billion at the end of June, according to the company's financial statements.

State Street has said potential losses, if any, from these conduits' activities are not expected to have a material impact on its results. The company was not available for comment.